It has been about a month since the last earnings report for Canadian Natural Resources (CNQ). Shares have added about 4.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Canadian Natural Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Canadian Resources Reports Loss in Q4, Dividend Hike
Canadian Natural reported fourth-quarter adjusted loss per share of 16 cents against the Zacks Consensus Estimate of earnings of 14 cents. The underperformance can be primarily attributed to lower liquids price realizations. The bottom line was way lower than the prior-year earnings of 37cents a share.
Notably, other Canadian players like Suncor Energy (SU), Imperial Oil Limited (IMO) and Cenovus Energy Inc. (CVE) also bore the brunt of declining oil prices in the fourth quarter, recording weaker y/y results.
Total revenues came in at $2,801 million, missing the Zacks Consensus Estimate of $3,989 million. In addition, the top line recorded a decline from fourth-quarter 2017 revenues of $3,945 million.
Production & Prices
Canadian Natural reported quarterly production of 1,081,368 barrels of oil equivalent per day (BOE/d), up from 1,020,094 BOE/d in the prior-year quarter. Oil and natural gas liquids (NGLs) output (accounting for more than 77.1% of total volumes) increased to 833,358 barrels per day (Bbl/d) from 744,100 Bbl/d recorded a year ago. Crude oil and NGLs production from operations in North America came in at 790,102 Bbl/d, higher than the year-ago quarter’s 705,033 Bbl/d.
Meanwhile, overall natural gas volumes recorded a year-over-year decline from 1,656 million cubic feet per day (MMcf/d) to 1,484 MMcf/d in the quarter under review. Production in North America came in at 1,441 MMcf/d, lower than the year-ago period’s 1,596 MMcf/d.
Canadian Natural’s realized natural gas price was C$3.46 per thousand cubic feet compared with the year-ago level of C$2.55. Realized oil and NGLs price fell 51.4% to C$25.95 per barrel from C$53.42 in the fourth quarter of 2017. Crude price differentials widened 45% on a year-over-year basis, in turn impacting the company’s results.
Expenses & Capex
Total expenses incurred in the quarter totaled C$4,601, in line with the year-ago level.
In the reported quarter, capital expenditure totaled C$1,181 million. Capex in the full year totaled C$4,731 million.
Canadian Natural announced a quarterly cash dividend of 37.5 cents per share, marking the 19th consecutive annual payout hike. The dividend will be payable on Apr 1, to shareholders of record as of Mar 22, 2019.
As of Dec 31, 2018, the Zacks Rank #3 (Hold) company had C$101 million in cash and cash equivalents, and a long-term debt of C$19,482 million, representing a debt-to-capitalization ratio of approximately 37.8%.
Canadian Natural expects capital expenditure to be around C$3.7 billion in 2019.
For full-year 2019, the company expects crude oil and NGL production from North American operations in the range of 221,000-241,000 Bbl/d. Its thermal in situ oil sands production is estimated within 104,000-124,000 bbl/d. Canadian Natural forecasts full-year 2018 liquids output in the band of 782,000-861,000 Bbl/d, while natural gas output guidance is maintained in the range of 1,485-1,545 MMcf/d.
First-quarter 2019 liquids production is anticipated within 759,000-817,000 Bbl/d and natural gas output is projected in the band of 1,490-1,520 MMcf/d.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 73.61% due to these changes.
Currently, Canadian Natural Resources has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Canadian Natural Resources has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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